Wrap Text
Unaudited Interim Condensed Consolidated Results for the Six Month Ended 30 September 2015
Argent Industrial Limited
Registration number 1993/002054/06
(Incorporated in the Republic of South Africa)
Share code: ART ISIN code: ZAE000019188
(‘the group’ or ‘the company’)
UNAUDITED INTERIM CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTH
ENDED 30 SEPTEMBER 2015
Financial Highlights
Headline earnings per share 33.5 cents
Headline earnings per share up 16.0%
Basic earnings per share 31.2 cents
Basic earnings per share up 21.5%
Gearing 4.9%
Net asset value per share 1 288.0 cents
Interim dividend per share 9 cents
The unaudited financial statements are presented on a consolidated basis
Unaudited Unaudited Audited
six months
Consolidated Income Statement for six months 30 Sept year ended
the period ended 30 Sept 2015 2014 31 Mar 2015
R 000 R 000 R 000
Revenue 847,610 937,544 1,791,163
Operating profit before finance
costs 46,645 43,196 58,136
Finance income 626 557 1,529
Finance costs (10,042) (13,310) (24,340)
Profit before taxation 37,229 30,443 35,325
Taxation (8,465) (6,697) (8,426)
Profit for the period 28,764 23,746 26,899
Attributable to equity holders of
the
- Parent 28,666 23,525 26,094
- Non-controlling interest 98 221 805
28,764 23,746 26,899
Basic earnings per share (cents) 31.2 25.7 28.5
Diluted earnings per share (cents) 31.2 25.7 28.5
Headline earnings per share (cents) 33.5 28.9 40.8
Diluted headline earnings per share
(cents) 33.5 28.9 40.8
Dividends per share (cents) (1) 9.0 7.0 15.0
1 Final dividend of 9 cents was paid
on 5 October 2015
Supplementary information
Shares in issue (000)
- at end of period 91,608 91,540 91,808
- weighted average 91,799 91,540 91,669
- diluted weighted average 91,799 91,540 91,669
Cost of sales (R 000) 658,804 729,072 1,398,847
Depreciation and amortisation
(R 000) 15,582 17,791 34,400
Calculation of headline earnings
(R 000)
Earnings attributable to ordinary
shareholders 28,666 23,525 26,094
Loss on disposal of property, plant
and equipment 1,147 4,029 8,711
Impairment of property, plant and
equipment 1,250 - 5,014
Total tax effects of adjustments (321) (1,128) (2,439)
Headline earnings attributable to
ordinary shareholders 30,742 26,426 37,380
Unaudited Unaudited Audited
Consolidated Statement of other
Comprehensive Income six months six months year ended
30 Sept
for the period ended 30 Sept 2015 2014 31 Mar 2015
R 000 R 000 R 000
Profit for the period 28,764 23,746 26,899
Other comprehensive income for the
period
Items that may be reclassified
subsequently to profit and loss
Exchange differences on translating
foreign operations 1,918 398 1,182
Items that will not be reclassified
subsequently to profit and loss
Revaluation of land and buildings - - (2,961)
Tax effect of above transactions - - 534
Total comprehensive income for the
period 30,682 24,144 25,654
Attributable to equity holders of
the
- Parent 30,584 23,923 24,849
- Non-controlling interest 98 221 805
30,682 24,144 25,654
Unaudited Unaudited Audited
Consolidated Statement of Financial
Position at at at
30 Sept
for the period ended 30 Sept 2015 2014 31 Mar 2015
R 000 R 000 R 000
ASSETS
Property, plant and equipment 637,267 711,548 641,355
Intangible assets 172,866 172,866 172,866
Long-term loan 15,242 14,034 14,621
Deferred taxation - - 8,082
Non-current assets 825,375 898,448 836,924
Inventories 481,148 466,701 489,741
Trade and other receivables 276,565 353,723 311,965
Taxation 448 1,472 596
Bank balance and cash 340 329 196
Current assets 758,501 822,225 802,498
Non-current assets held for sale 4,750 4,911 41,347
TOTAL ASSETS 1,588,626 1,725,584 1,680,769
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 451,717 451,744 452,597
Reserves 31,637 31,040 29,705
Retained earnings 696,513 679,139 667,847
Attributable to owners of the parent 1,179,867 1,161,923 1,150,149
Non-controlling interest 10,672 9,990 10,574
Total shareholders' funds 1,190,539 1,171,913 1,160,723
Interest-bearing borrowings 11,828 69,932 33,147
Deferred tax 52,767 50,607 55,127
Non-current liabilities 64,595 120,539 88,274
Trade and other payables 199,625 276,573 250,574
Bank overdraft 87,279 115,764 135,130
Current portion of interest-bearing
borrowings 46,588 40,795 46,068
Current liabilities 333,492 433,132 431,772
TOTAL EQUITY AND LIABILITIES 1,588,626 1,725,584 1,680,769
Net asset value per share (cents) 1,288.0 1,269.3 1,252.8
Unaudited Unaudited Audited
Condensed Consolidated Statement of
Cash Flows six months six months year ended
30 Sept
for the period ended 30 Sept 2015 2014 31 Mar 2015
R 000 R 000 R 000
Cash generated from operations 57,475 94,368 128,699
Finance income 626 557 1,529
Finance costs (10,042) (13,310) (24,340)
Dividends paid - 292 (13,576)
Normal taxation paid (2,398) (3,633) (7,514)
Cash flow from operating activities 45,661 78,274 84,798
Cash flow from investing activities 24,012 (3,522) 1,114
Cash flow from financing activities (21,679) (28,052) (58,711)
Net increase in cash and cash
equivalents 47,994 46,700 27,201
Cash and cash equivalents at
beginning of period (134,934) (162,135) (162,135)
Cash and cash equivalents at end of
period (86,940) (115,435) (134,934)
Consolidated Statement of Changes in Employee
Equity share
for the period ended Stated Treasury incentive
30 September 2015 capital shares reserve
R 000 R 000 R 000
Balance at 30 September 2014 –
unaudited 545,643 (93,899) 532
Net treasury movement - 853 -
Share-based payments - - 314
Transfer of reserve to retained
earnings - - (6)
Total comprehensive income for the
period - - -
Dividends - - -
Less dividend on treasury shares - - -
Balance at 31 March 2015 545,643 (93,046) 840
Share-based payments - - 14
Share buy back (880) - -
Total comprehensive income for the
period - - -
Balance at 30 September 2015 544,763 (93,046) 854
Consolidated Statement of Changes in
Equity Foreign
for the period ended currency
30 September 2015 Revaluation translation Retained
(continued) reserve reserve earnings
R 000 R 000 R 000
Balance at 30 September 2014 –
unaudited 39,448 (8,940) 679,139
Net treasury movement - - -
Share-based payments - - -
Transfer of reserve to retained
earnings - - 6
Total comprehensive income for the
period (2,427) 784 2,570
Dividends - - (14,474)
Less dividend on treasury shares - - 606
Balance at 31 March 2015 37,021 (8,156) 667,847
Share-based payments - - -
Share buy back - - -
Total comprehensive income for the
period - 1,918 28,666
Balance at 30 September 2015 37,021 (6,238) 696,513
Consolidated Statement of Changes in Total
Equity attributable Total
for the period ended to owners Non- Share-
30 September 2015 of the controlling holders’
(continued) parent interest funds
R 000 R 000 R 000
Balance at 30 September 2014 –
unaudited 1,161,923 9,990 1,171,913
Net treasury movement 853 - 853
Share-based payments 314 - 314
Transfer of reserve to retained
earnings - - -
Total comprehensive income for the
period 927 584 1,511
Dividends (14,474) - (14,474)
Less dividend on treasury shares 606 - 606
Balance at 31 March 2015 1,150,149 10,574 1,160,723
Share-based payments 14 - 14
Share buy back (880) - (880)
Total comprehensive income for the
period 30,584 98 30,682
Balance at 30 September 2015 1,179,867 10,672 1,190,539
Segmental Review
Manufactur- Steel Auto-
ing trading motive
R 000 R 000 R 000
Business segments
for the six months ended 30
September 2015 – unaudited
Revenue from external sales 504,448 269,412 48,579
Profit/(loss) before taxation 51,938 (15,924) (977)
Taxation - - -
Profit for the period - - -
Other information
Net assets 689,430 279,347 45,877
Capital expenditure 9,637 1,345 3,831
Depreciation/amortisation 9,746 3,508 1,805
Finance costs* (2,867) 4,800 1,171
Finance income 626 - -
*As per the group policy, finance
costs and finance income derived
from primary banking is netted off.
The company has net finance income
and this is distorting the segment
for finance costs.
for the six months ended 30
September 2014 – unaudited
Revenue from external sales 503,009 296,599 101,758
Profit/(loss) before taxation 26,912 10,889 (9,911)
Taxation - - -
Profit for the period - - -
Other information
Net assets 631,400 287,823 93,201
Capital expenditure 7,039 1,671 1,572
Depreciation/amortisation 9,402 3,798 4,122
Finance costs* (425) 2,218 913
Finance income 557 - -
for the year ended 31 March 2015 –
audited
Revenue from external sales 954,443 567,710 202,123
Profit/(loss) before taxation 81,406 11,566 (64,879)
Taxation - - -
Profit for the year - - -
Other information
Net assets 641,685 283,471 68,295
Capital expenditure 11,502 9,352 8,636
Depreciation/amortisation 19,013 7,398 7,032
Finance costs* (1,814) 4,041 1,940
Finance income 1,193 - -
Segmental Review (continued)
Consoli-
Watch list Properties dated
R 000 R 000 R 000
Business segments
for the six months ended 30
September 2015 – unaudited
Revenue from external sales 24,725 446 847,610
Profit/(loss) before taxation (2,371) 4,563 37,229
Taxation - - (8,465)
Profit for the period - - 28,764
Other information
Net assets 22,785 205,419 1,242,858
Capital expenditure 275 1,810 16,898
Depreciation/amortisation 523 - 15,582
Finance costs* 219 6,719 10,042
Finance income - - 626
*As per the group policy, finance
costs and finance income derived
from primary banking is netted off.
The company has net finance income
and this is distorting the segment
for finance costs.
for the six months ended 30
September 2014 – unaudited
Revenue from external sales 35,412 766 937,544
Profit/(loss) before taxation (1,836) 4,389 30,443
Taxation - - (6,697)
Profit for the period - - 23,746
Other information
Net assets 23,608 185,016 1,221,048
Capital expenditure 305 3,932 14,519
Depreciation/amortisation 468 1 17,791
Finance costs* 1,152 9,452 13,310
Finance income - - 557
for the year ended 31 March 2015 –
audited
Revenue from external sales 65,740 1,147 1,791,163
Profit/(loss) before taxation (4,151) 11,383 35,325
Taxation (8,426)
Profit for the year 26,899
Other information
Net assets 25,157 189,160 1,207,768
Capital expenditure 1,748 7,830 39,068
Depreciation/amortisation 955 2 34,400
Finance costs* 2,114 18,059 24,340
Finance income - 336 1,529
Rest of the
South Africa world Consolidated
R 000 R 000 R 000
Geographical segments
for the six months ended 30
September 2015 – unaudited
Revenue from external sales 789,655 57,955 847,610
Profit before taxation 16,919 20,310 37,229
Taxation - - (8,465)
Profit for the period - - 28,764
Other information
Net assets 1,177,801 65,057 1,242,858
Capital expenditure 16,231 667 16,898
Depreciation/amortisation 14,288 1,294 15,582
Finance costs 10,028 14 10,042
Finance income 626 - 626
for the six months ended 30
September 2014 – unaudited
Revenue from external sales 892,302 45,242 937,544
Profit before taxation 21,155 9,288 30,443
Taxation - - (6,697)
Profit for the period - - 23,746
Other information
Net assets 1,174,155 46,893 1,221,048
Capital expenditure 14,145 374 14,519
Depreciation/amortisation 16,433 1,358 17,791
Finance costs 13,289 21 13,310
Finance income 557 - 557
for the year ended 31 March 2015 –
audited
Revenue from external sales 1,727,574 63,589 1,791,163
Profit before taxation 29,164 6,161 35,325
Taxation - - (8,426)
Profit for the year - - 26,899
Other information
Net assets 1,152,665 55,103 1,207,768
Capital expenditure 38,446 622 39,068
Depreciation/amortisation 31,754 2,646 34,400
Finance costs 24,302 38 24,340
Finance income 1,529 - 1,529
Financial Overview
Argent Industrial Limited managed to successfully navigate through a somewhat
difficult South African economy. The change in the focus of the core business
into manufactured brands is starting to generate the required returns and has
set the platform for the group’s future expansion.
Operations Review
Manufacturing
The division performed well and in line with the board’s expectations. The
group will strive to continue to enhance both the margin and brand identities
of each of the companies making up this division. The Xpanda brand and New
Joules North America are currently the best performers, with Castor and Ladder
showing the highest growth. Toolroom Services was negatively affected by
reduced government spending and slow start-up of the country’s mining sector
at the beginning of the current year. Manufacturing productivity in the group
has improved through a targeted approach of leaner production by cutting costs
and through pressure on divisions in the group to work together to optimise
operations among them, resulting in an overall positive impact on margins. In
this division there is currently more activity in bigger tenders being issued
by some government institutions and businesses, as well as increased export
opportunities.
Steel Trading
The slump in the steel market, coupled with the sudden 17% drop in steel
prices, cost the group an estimated R18 million over the period. The losses
were enhanced by continuous power outages caused by the inefficiencies of
Eskom, as well as ongoing cable theft. The group installed a 700 kva generator
at Phoenix Steel Natal, which resulted in fewer interruptions in this company.
However, the group cannot economically self-generate power for the larger
equipment based in Gauteng, such as the slitting, cut to length lines and tube
mills. The steel market, although still critical, has stabilised. However,
this division does need government investment via infrastructure projects to
rejuvenate it. The much anticipated import duty will help in that turnover
will increase proportionately while margins are expected to remain at current
levels.
Automotive
The group’s strategy to downsize the automotive division has curtailed losses
and improved cash flow. The persistent sluggish economy in mining in
particular hampered the recovery plans for the rubber component manufacturer,
Allan Maskew. The company has, however, managed to secure its first railroad-
related product export to the United States of America. Future work will
depend on the success of the first order.
Watch list
Cedar Paint remains a concern to the board due to ongoing margin pressures.
The increased loss in the current period, compared to the previous, is a
result of the reduced manufacturing recoveries caused by management slowing
down production to reduce the stock holding as well as retrenchments amounting
to R273 935. The group is currently negotiating with two potential buyers for
the purchase of the company.
Properties
During the current period, the group sold three properties, Phoenix Steel
Mpumalanga for R10.5 million, Gammid Cape for R29.7 million and Gammid George
for R4.7 million. The Phoenix Steel Mpumalanga and Gammid George properties
where vacant and resulted in an additional impairment of R1.25 million. The
Gammid Cape property netted a loss of R1.172 million. The group has entered
into a transaction to dispose of the Giflo Engineering property for an amount
of R17 million. The buyer guarantees are expected before the end of November
2015 and the board expects the sale to go through in the first half of next
year.
Outlook
We are pleased by the performance of the group’s core manufacturing entities
and continue to focus on non-performing assets in order to ‘fix or exit’ these
businesses. A substantial portion of the group’s income is derived from
manufacturing, which, with the sustained weakness of the Rand, bodes well for
group.
The group’s overseas businesses are performing very well, with 54% of the
profit before tax coming from this geographic segment compared to 31% in the
previous period. Additional export opportunities are the key focus for the
short to medium term.
While all divisions are suffering under various negative factors, including
input costs, increased regulatory demands, weak commodity prices and power
outages, the group is adapting strategies to deal with these challenges
continuously.
The group is sitting on a full order book for October to December, both
locally and overseas, subject to the unforeseen, and we expect the second six
months to track the first six months, backed by an improvement in the steel
trading division.
Basis of Presentation
The unaudited interim condensed consolidated financial statements were
prepared in accordance with International Financial Reporting Standards
(IFRS), the presentation and disclosure requirements of IAS 34 – Interim
Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, the Financial Reporting Pronouncements as
issued by the Financial Reporting Standards Council and in compliance with the
Companies Act of South Africa (Act No. 71 of 2008) and the Listings
Requirements of the JSE Limited. The accounting policies are consistent with
those of the previous annual financial statements, except for the adoption of
improved, revised or new standards and interpretations. The aggregate effect
of these changes in respect of the period ended 30 September is nil. The
unaudited interim condensed consolidated financial statements were prepared
under the supervision of the Financial Director, Ms SJ Cox CA (SA). Any
reference to future financial performance included in this announcement has
not been reviewed or reported on by the group’s auditors.
Changes to the Board
Mr Clayton Angus, being a non-executive director of the company, was not
nominated to be re-elected at the Annual General Meeting and resigned as
director of the company with effect from 20 August 2015.
Dividend
Subsequent to 30 September 2015, an interim gross dividend of 9 cents per
share was approved and declared by the Board of Directors for the six-month
period ending 30 September 2015 from income reserves.
The following dates will apply to the abovementioned interim dividend:
Last day to trade cum dividend: Friday, 18 March 2016
Trading ex-dividend commences: Monday, 21 March 2016
Record date: Friday, 25 March 2016
Dividend payment date: Monday, 28 March 2016
Share certificates may not be dematerialised or rematerialised between Monday,
21 March 2016, and Friday, 25 March 2016, both days inclusive.
In determining the dividends tax (DT) of 15% to withhold in terms of the
Income Tax Act (Act No. 58 of 1962) for those shareholders who are not exempt
from the DT, no secondary tax on companies (STC) credits have been utilised.
Shareholders who are not exempt from the DT will therefore receive a dividend
of 7.65 cents per share net of DT. The group has 96 290 594 ordinary shares in
issue and its income tax reference number is 9096/002/71/3.
In the absence of specific mandates, dividend cheques will be posted to
shareholders. Ordinary shareholders who hold dematerialised shares will have
their accounts at their CSDP or broker credited/updated on Monday, 28 March
2016.
_________________________________________________________________________
On behalf of the board
TR Hendry CA (SA) Umhlanga Rocks
Chief Executive Officer 17 November 2015
Registered Office: First floor, Ridge 63, 8 Sinembe Crescent,
La Lucia Ridge Office Estate, 4019
Tel: +27 (0) 31 791 0061
Auditors: Grant Thornton (A Timol as designated auditor)
Sponsors: PSG Capital (Pty) Ltd
Transfer Secretaries: Link Market Services South Africa (Pty) Ltd,
13th floor, Rennies House,
19 Ameshoff Street, Johannesburg 2001
Company Secretary: Jaco Dauth
Directors: Ms SJ Cox (Financial Director), PA Day (Independent Non-executive),
TR Hendry (Chief Executive Officer), Mrs JA Etchells (Independent Non-
executive), AF Litschka, K Mapasa (Independent Non-executive) and T
Scharrighuisen (Non-executive Chairman)
Date: 17/11/2015 12:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
